Zulpo v. Farm Bureau Mut. Ins. Co.

• Citation: 98 Ark. App. 320,255 S.W.3d 494
• Decision Date: 11 April 2007
• Docket Number: No. CA 06-787.,CA 06-787.
• Parties: Gary ZULPO, et al, Appellants, v. FARM BUREAU MUTUAL INSURANCE COMPANY OF ARKANSAS, INC., Appellee.
• Court: Arkansas Court of Appeals

255 S.W.3d 494

98 Ark. App. 320

Gary ZULPO, et al, Appellants, v. FARM BUREAU MUTUAL INSURANCE COMPANY OF ARKANSAS, INC., Appellee.

No. CA 06-787.

Court of Appeals of Arkansas.

April 11, 2007.

Elliott & Smith, P.A., by: Don R. Elliott, Jr., Fayetteville; Julia L. Busfield, Little Rock, AR, for appellant James McGrew as Special Administrator of the Estate of Jeron Dean McGrew, Deceased.

Everett, Wales & Mitchell, by: Casey D. Copeland, Fayetteville, AR, for appellants Gary and Christie Zulpo.

Davis, Wright, Clark, Butt & Carithers, PLC, by: Sidney P. Davis, Jr. and Chad Gowens, Fayetteville, AR, for appellee.

ROBERT J. GLADWIN, Judge.

This appeal is from a summary judgment for appellee Farm Bureau Mutual Insurance Company of Arkansas, Inc., declaring that it had no obligation to defend or indemnify appellants Gary Zulpo and his wife, Christie Zulpo, in an action brought against them by appellant James McGrew, as special administrator of the estate of his deceased son, Jeron McGrew. This case presents a legal question that has not been addressed by the courts of Arkansas — whether providing full-time child-care services for compensation in one's home, on a regular basis, comes within a "business-pursuits" exclusion in a homeowner's insurance policy. We hold that it does and affirm the trial court's decision.

In March 2004, Christie Zulpo began babysitting one-year-old Jeron in her home three or more days per week, five or more hours per day, for $100 weekly. On September 2, 2004, Christie, who had an appointment, left Jeron with Gary. Tragically, Jeron died while in Gary's care. At the time of his death, the Zulpos had a homeowner's policy with appellee.

In July 2005, James sued Gary for Jeron's death in the Benton County Circuit Court. In August 2005, appellee brought this declaratory-judgment action against James and the Zulpos, alleging that the personal-liability protection afforded the Zulpos in their homeowner's policy was subject to the following exclusion: "Unless special permission for coverage is granted by endorsement, certain types of losses are not covered by your policy. Under Personal Liability Coverage and Medical Payments to Others Coverage, we do not cover . . . bodily injury or property damage arising out of your business pursuits[.]" The policy defined "business" as follows: "The word `business' means a trade or profession, or occupation, including farming whether full or part-time. It does not include newspaper delivery, caddying, lawn care nor any similar activity minors normally perform, unless the activity is your full-time occupation."

Appellee sought a declaration that any liability that Gary might have had to James for Jeron's death was not covered by the policy because of the business-pursuits exclusion and that it had no obligation to defend Gary in the underlying lawsuit. James filed a counterclaim for a declaration that Gary was entitled to coverage because he was not engaging in his full-time occupation at the time of Jeron's death. The Zulpos also filed a counterclaim for declaratory judgment, asserting that, because babysitting is an activity that minors normally perform, their care of Jeron was not included within the business-pursuits exclusion.

In discovery, James stated that he and his wife paid Christie $100 for providing child-care services five days per week in her home on weekdays; that, on more than 75% of the weeks between March 15, 2004, and September 2, 2004, Christie provided child-care services for the McGrews three or more days per week; and that, on an average day, she did so for five or more hours per day. The Zulpos admitted these facts and that, in December 2003 or January 2004, Christie placed a newspaper advertisement for child care; that, on rare occasions, Gary provided child-care services for the McGrews on weekdays in his home; that, on the day Jeron died, Christie provided child care for another child, in addition to Jeron and her own child; that the Zulpos reported $1626 in business income acquired as a result of Christie's child-care services on their 2004 joint income-tax return; that Christie used flyers to advertise her child-care services; and that neither Christie nor Gary had applied for or received a license to care for children from any federal, state, or local authority.

Appellee moved for summary judgment on the basis of the business-pursuits exclusion. In response, James argued that the business-pursuits exclusion was susceptible to more than one interpretation and, therefore, should be interpreted in favor of the insured and strictly against appellee. He filed Christie's affidavit, in which she stated that, during the relevant time period, she was employed as a nurse's assistant by a local hospital from 7 a.m. to 7 p.m. every Saturday and Sunday and that Gary was employed full-time as a mechanic with J.B. Hunt Transportation, Inc. She stated that, during this time, she babysat no more than three children, one of which was her own. James also moved for summary judgment. After a hearing, the circuit court granted appellee's motion and denied James's cross-motion. James, Gary, and Christie filed timely notices of appeal.

Summary judgment should be granted only when it is clear that there are no genuine issues of material fact, and the party is entitled to judgment as a matter of law. Smith v. Farm Bureau Mut. Ins. Co. of Ark., Inc., 88 Ark.App. 22, 194 S.W.3d 212 (2004). Once the moving party has established a prima facie entitlement to summary judgment, the opposing party must meet proof with proof and demonstrate the existence of a material issue of fact. Id. On review, we must determine whether there are any genuine issues of material fact. Id. In our review, we consider whether the evidentiary items presented by the moving party in support of the motion leave a material fact unanswered. Id. All proof is viewed in the light most favorable to the party resisting the motion, with all doubts and inferences resolved against the moving party. Id. Although an order denying a motion for summary judgment is only an interlocutory order and is not appealable, review of certain interlocutory orders is allowed in conjunction with the appeal of a final judgment. Id. Thus, an order denying summary judgment may be reviewable in conjunction with an appeal of an order granting summary judgment. See id.

The Zulpos argue that Christie's babysitting was not a business under the policy; in the alternative, they assert that, even if it was a business, it was within the category of activities excepted from the definition of business. James argues that the circuit court erred in granting appellee's motion for summary judgment and in denying his cross-motion for summary judgment. He argues that the definition of "business" in this policy does not apply to part-time, incidental money-making activities such as babysitting. Pointing out that Gary was a full-time mechanic and that Christie was a nurse's assistant at the local hospital, he contends that coverage for the claims arising out of Jeron's death was provided by the policy as a matter of law. He stresses that the insurance policy does not define "business pursuits" and that it does not expressly exclude coverage for injuries arising out of babysitting or child care. He also argues that the exception to the exclusion clearly applied to child care, pointing out that the amount of money Christie received from it was relatively small. In the alternative, he argues that the policy language is ambiguous, leaving issues of fact to be tried.

The law regarding construction of insurance policies is well settled. Smith v. Farm Bureau Mut. Ins. Co., supra. Once it is determined that there is coverage, it must be determined whether the exclusionary provisions in the policy eliminate coverage. Id. Exclusionary endorsements must adhere to the general requirements that the insurance terms must be expressed in clear and unambiguous language. Id. If the language is unambiguous, we give effect to the plain language of the policy. Id. If the language is ambiguous, then we resort to the rules of construction. Id. The construction and legal effect of a written contract are matters to be determined by the court. Id. Provisions of an insurance policy are construed most strongly against the insurance company, which prepared it. Id. If the language of the policy is susceptible to two interpretations-one favorable to the insured and one favorable to the insurer, then the interpretation most favorable to the insured must be adopted. Id. The fact that a term is not defined in a policy does not automatically render it ambiguous. Curley v. Old Reliable Cas. Co., 85 Ark. App. 395, 155 S.W.3d 711 (2004). Language is ambiguous if there is doubt or uncertainty as to its meaning and it is fairly susceptible to more than one equally reasonable interpretation. Ison v. Southern Farm Bureau Cas. Co., 93 Ark.App. 502, 221 S.W.3d 373 (2006). Usually, whether an activity is a business pursuit is a factual question. Shelter Insurance Co. v. Hudson, 19 Ark.App. 296, 720 S.W.2d 326 (1986); United States Fire Ins. Co. v. Reynolds, 11 Ark.App. 141, 667 S.W.2d 664 (1984).

Ordinarily, the question of whether the language of an insurance policy is ambiguous is one of law to be resolved by the court. Smith v. Farm Bureau Mut. Ins. Co., supra. The construction and legal effect of written contracts are matters to be determined by the court, not by the jury, except when the meaning of the language depends upon disputed extrinsic evidence. Id. Thus, where the issue of ambiguity may be resolved by reviewing the language of the contract itself, it is the trial court's duty to make such a determination as a matter of law. Id.

The application of a business-pursuits exclusion to child-care services has not been addressed by the courts of this state. It has, however, been addressed in many other jurisdictions, and the results are not uniform. In ...